About

RickB- Human, Artist, Fool.

Ynys Mon, UK.

The blog is called ten percent because of what Kurt Vonnegut wrote when remembering Susan Sontag - She was asked what she had learned from the Holocaust, and she said that 10 percent of any population is cruel, no matter what, and that 10 percent is merciful, no matter what, and that the remaining 80 percent could be moved in either direction.-

And I'm writing it because I need the therapy and I lust for world domination.

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Why Banks Shouldn’t Run Countries

Prominent neo-liberal economists, including Fred Mishkin, a high-profile advocate of ‘inflation targeting’ and Bush nominee to the Federal Reserve, (until he unexpectedly resigned in May, 2008) and Tryggvi Þór Herbertsson, were paid, I have been reliably informed, considerable sums by the Icelandic Chamber of Commerce to produce a report on Financial Stability in Iceland in September, 2006. The purpose of this report was to keep the banking party going after the near-disastrous ‘mini crisis’ of March, 2006. The report was the centrepiece of a ‘road show’ promoting Iceland as a haven of financial stability that autumn. (See this speech made in New York by Mrs. Valgerður Sverrisdóttir, Minister for Foreign Affairs of Iceland at the time, and a proud farmer.)

We know that Fred Mishkin (now of Columbia University) was not the only academic economist to act as cheerleader for Iceland’s reckless bankers. Prof. Richard Portes, President of Britain’s Royal Economic Society, played a similar role. (For more about Professor Portes’s role in the Icelandic saga, go here.)

A year after the Mishkin Report, in November, 2007, Prof. Portes produced another report for the Icelandic Chamber of Commerce which concluded that Iceland’s banks were ‘successful and resilient’ and that ‘the banks have been highly entrepreneurial without taking unsupportable risks; good supervision and regulation have contributed to that, using EU legislation.”

The privatisation of Iceland’s banks began as late as 1998, and was not complete until 2002. See the excellent chart below, courtesy of Stefán Ólafsoon of the University of Iceland. The banks lost no time in piling up debts.

By 2008 – when Prof. Portes wrote his report – private bank liabilities made up 10 – 12 x Iceland’s GDP, according to a reliable source.

And of course we all know what happened then, Iceland had no crisis, the government stayed in power, beloved by all its people and everyone lived happily ever after! Well that’s what a neoliberal academic told me anyways (after I paid them a good fee naturally)…